Willits Town Center in Basalt wants to convert commercial to residential space

A glut of unleased commercial space spurred the developer of Willits Town Center to ask Basalt for approval to adjust its plans.Scott Condon/The Aspen Times |

The development firm at Willits Town Center says there is so little demand for additional commercial space right now that it wants flexibility to convert some to residential.

Mariner Real Estate Management applied to the town of Basalt to amend requirements that it build commercial on specified undeveloped areas in order to retain the ability to build additional residential square footage.

The company also wants to transfer space that’s already approved for commercial to residential — without adding to the overall square footage.

Mariner’s request said the alterations are needed because the times are changing and the rules need to change with them in order to complete the project. The request noted that the town has been flexible since the project was first approved in 2001 in response to changes in the market.

“When development opportunities became available to Willits but conflicted with underlying (planned unit development) requirements, amendments were enacted to remove obstacles,” the request said. For example, alterations were made to provide the space necessary to land Whole Foods Market. The grocer has become the anchor tenant of Willits Town Center.

“Twelve separate amendments to the (approvals) have been made, each prompted by new information and new market demands,” Mariner’s request said.

Mariner has been trying to fill commercial spaces for years at Willits Town Center with mixed results. Now there’s the potential for a commercial glut in the midvalley. The Eagle County commissioners this summer approved the Tree Farm project, across Highway 82 from Whole Foods. The approval includes 135,000 square feet of commercial space, about half of which could be a hotel. The other half would be shops, restaurants and offices.

Mariner opposed the Tree Farm, partially on the grounds that it was already difficult to lease commercial space. A letter from Mariner representative Tim Belinski to the county commissioners said the Tree Farm’s proposed commercial plan “would confront a market already struggling to absorb over 70,000 square feet of vacant retail and office space at Willits, plus more still to come.”

Belinski wrote that 126,000 square feet of commercial space is yet to be built at Willits Town Center.

“Over its development life, Willits has brought on line 272,000 square feet of commercial while approximately 25 percent of it is currently vacant and unoccupied,” he wrote in May 2017. “Willits is tasked with constructing a sizable amount of additional commercial space, most of which is retail.”

Mariner sought and received approval to add 60,000 square feet of commercial space and 30,000 square feet of residential space in 2015 to hundreds of thousands of square feet already approved. The firm said at that time that the increased density was needed to make the development more attractive to potential commercial tenants. That didn’t pan out.

Now that the Tree Farm has been approved, Willits wants to change its approach. It wants commercial obligations reduced from 10,000 square feet to 3,500 square feet in each of two unconstructed buildings.

It also wants to transfer some commercial square footage to residential while maintaining architectural and design guidelines, block density and building height limits. There was no specific request on how much commercial Mariner wants to convert to residential.

The development firm also wants to remove the limit of 100 future free-market residential units to an undefined number, and increase the allowable size to 2,500 from 1,800 square feet per unit.

The Basalt Planning and Zoning Commission started reviewing the requests Oct. 3. It will start debate and possibly make an advisory vote Oct. 17. The issue then goes to the Town Council.

The planning staff hasn’t taken a position yet on the requests but raised issues that need attention. The size cap of the residential units was proposed when extra square footage was approved in 2015, the staff memo noted.

“Staff’s goal was to keep the current economic mix in Willits Town Center and not promote larger, more expensive units,” the memo said.

The staff supported extra commercial space in 2015 because that would generate new sales tax revenue. Converting commercial to residential can have fiscal impacts, the memo said.

“Residential development, even high-end developments, initially bring in fairly substantial building permit-related revenues while they are being built, but then cost the town more in services,” the memo said. “Retail sales to these residents of the proposed residential development do not offset the difference.”

The town’s financial consultant is examining how converting commercial space to residential would affect Basalt’s public coffers.